Until you have satisfied yourself that your plan “makes sense”, you shouldn’t even think of trying to sell to anyone else. Once you’re convinced you can make your idea work then you can show it to lenders and prospective investors. A Business Plan is not a “one-time” document just for obtaining investors or financing. You should consider it to be a “living document” which you will update and upgrade from time to time as information and circumstances change and as appropriate as you thus make changes in your business.
A Business Plan/Financial Plan is an absolute necessity in applying for a loan for a start-up business and is highly recommended in applying for a loan for an existing business.
How do you do it? It’s not easy. And it’s unlikely you can just sit down and produce a good plan in one sitting because a lot of trial and error and testing of ideas is involved. It will most likely evolve over a period of time.
How? Think about your business idea often and ask yourself these questions about every aspect of it. Who? what? where? when? why? how? how much? how many? how often? Write down the answers. Look for “holes”. It’s easy to list all kinds of ideas. Do you have the knowledge and resources to carry them out cost-effectively? Are you “double counting” your resources, counting on them to do two different things at the same time?
Why do you want to pursue a particular part of your plan? Who will carry it out? When? Where? How much will it cost? How many sales will each marketing campaign generate? How does the cost to acquire a prospect, make a sale, or provide the product or service compare to your product or service pricing parameters?
Visualize some “typical days”. What is being done? Why? Who is doing it? Ask and answer these questions over and over until you are convinced you know how your business will function day-to-day. Now capture this knowledge in your plan and show how it will work financially. Make changes in your plan until you have a plan where all the elements fit together and work from a marketing, operational, and financial perspective.
There is no single prescribed format for a Business Plan. However, we believe many of you will find the format shown below to be helpful. You should feel free to adjust it to your unique circumstances.
A SCORE Counselor will be glad to assist you by reviewing your business plan draft(s) and giving you constructive comments. This can be accomplished in face-to-face meetings or by exchanging emails of sections of the plan as you write them. Use of a word processor such as Microsoft Word or Works is recommended. Your SCORE Counselor can suggest Internet Web Sites that you may find helpful in addition to this outline.
Memphis SCORE Template & Tools Gallery
Provides an excellent free template for use with Microsoft Word for the preparation of a business plan. Also lists other templates of interest. Offers several excellent business links, including additional business planning tools.
Small Business Administration
There is excellent help and a tutorial on preparing a Business Plan on the SBA website.
Business Plan Outline
Name of Business, Business Address; Names, Addresses, Phone Numbers, Fax Numbers of Owners.
Executive Summary (Statement of Purpose)
An overview and summary of the plan or financing proposal as a whole. This should help a reader understand what is contained in the document. Do not expect the reader to sort through the document trying to figure out how it all fits together. TELL HER. If you are requesting financing, how much do you need and what will it be used for? Although this is at the beginning of the document, it should be written LAST, after all of your decisions have been made. The remainder of the plan provides the detail.
Describe your product or service. Will you manufacture, distribute, service, or do some combination of these? What kind of facilities will you have? What needs or want does your product or service satisfy? To whom will you sell? Why will they want to buy from you? Who are your competitors? What is your competitive advantage? Where and how will you sell? How will your business grow and profit?
Describe your “target market” in detail. Where are they? How will you cost-effectively reach this market? What will it cost to identify a prospect? What will it cost to make a sale? Can you price this cost into your product or service and still be competitive? What sales volumes are required? Describe your specific marketing plans, with anticipated costs and results.
Operations Plan (Organization and Management)
How will you provide the product or service after the sale? Will you have employees? Managers? What kinds of skills will they need? Will they be easy to recruit, select, train, and retain? What will they cost? Can you price the costs into your product and remain competitive? Legal structure? Professional advisors? Experience of owners and managers?
Summarize your sources and uses of funds. How much financing will you need? Collateral? Provide projected cash flow statements and income statements by month for the first year and by quarter for the following two years. Provide projected balance sheets at start-up and the end of each of the next 3 years. Provide a break-even and sensitivity analysis. Provide a summary of the assumptions used to produce these projections.
Copies of owners’ resumes, tax returns, and financial statements. Leases, equipment lists, and inventory lists should be included here if appropriate.